Payment Protection Insurance
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by: MosleyShepherd
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What is mortgage insurance? Mortgage insurance protects the lender against default by the buyer. This enables the lender to make a loan, which the lender considers a higher risk. Lenders often require mortgage insurance for loans where the down payment is less than 20% of the sales price. You may be billed monthly, annually, by an initial lump sum, or some combination of these practices for your mortgage insurance premium.Except for the addition of an FHA mortgage insurance premium, FHA closing costs are similar to those of a conventional loan. The FHA requires a single, upfront mortgage insurance premium equal to 2.25% of the mortgage to be paid at closing. This initial premium may be partially refunded if the loan is paid in full during the first seven years of the loan term.FHA MIP (Mortgage Insurance Premium) is a fee collected in connection with an FHA loan.
How do I pay for coverage? When you sign up for coverage, your premium will be added to your mortgage statement and identified as optional insurance coverage. The premium will be conveniently collected with your monthly mortgage payment.A high-ratio mortgage is one where the amount to be borrowed is greater than 75% of the purchase price or appraised value. High-ratio mortgages generally require mortgage loan insurance provided by CMHC, Genworth, and AIG United Guaranty..
How long is this going to last? long as people are buying homes through FHA loans and paying the mortgage insurance premium there will be people due this refund, so you can do this for many years to come.
Do I have to pay Private Mortgage Insurance (PMI)? Private mortgage insurance applies when you borrow over the 80% mark. That is, if you purchase a property for $100,000 and seen a $90,000 loan you payment likely will include a monthly mortgage insurance premium. Sometimes lenders offer a ""No MI"" option whereby the monthly mortgage insurance does not apply in return for a slightly higher interest rate.
How long is this going to last? long as people are buying homes through FHA loans and paying the mortgage insurance premium there will be people due this refund, so you can do this for many years to come.Ask your real estate agent or lender for information on the HELP program from the FHA. HELP - Homebuyer Education Learning Program - is structured to help people like you begin the homebuying process. It covers such topics as budgeting, finding a home, getting a loan, and home maintenance. In most cases, completion of this program may entitle you to a reduction in the initial FHA mortgage insurance premium from 2.
What is MIP (mortgage insurance premium)? FHA insured mortgages generally require mortgage insurance. Mortgage insurance is a policy that protects lenders against some or most of the losses that result from defaults on home mortgages.If so, it's more that likely you are paying a mortgage insurance premium each month. These premiums can add up to hundreds or even thousands of dollars each year. The worst part is you might not even have to be paying this insurance. If you have paid your mortgage down or if you property has appreciated enough, you could have this insurance premium removed.If so, it's more that likely you are paying a mortgage insurance premium each month.
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